Homework Help: Maximizing profit

1. Oct 1, 2012

mtingt

An investment broker wants to invest up to $33000 She can invest in two mutual funds based on their yearly average return for the 5 years ending December 31, 2009: the Franklin Natural Resources fund yielding 8% and the Oppenheimer Developing Markets A fund yielding 10% She wants to invest at least$8000 in the Franklin Natural Resources fund and no more than 13000 in the Oppenheimer Developing Markets A fund. How much should she invest in each type of fund to maximize her return?

I got the two maximizing points 20,000 and 13,000

RGV

3. Oct 1, 2012

mtingt

ok thanks, I put that in online and it said my Max return was wrong, is it because it said 5 years?
even if it was 5 years, I multiplied the max return by 5 and it was still wrong?

is it just me or something is wrong with the system?

4. Oct 2, 2012

Ray Vickson

The LP formulation is: let F = $000s invested in Franklin and O =$000s invested in Oppehheimer. then: the annual yield, in \$000s is 80*F + 100*O, so:
max Z = 80*F + 100*O
st
F >= 8
O <= 13
O+F <= 33
O,F >= 0.

The optimal solution is F = 20, O = 13, giving Z = 2900. Then the only issue is whether or not to multiply the 2900 by 5. If some system is not accepting this solution that system is wrong or has bugs.

RGV